New Delhi, May 29 -- The Reserve Bank of India (RBI) has warned that the West Asia war has emerged as one of the biggest threats to global and domestic economic stability, even as it maintained that India's economy remains relatively resilient.

The RBI, in its FY26 annual report released on Friday, said risks of higher inflation, supply chain disruptions and slower growth are beginning to weigh on the outlook for 2026-27.

"Geopolitical risk has re-emerged as the dominant drag on global growth in 2026," it said, adding that the adverse impact of the war, which broke out in late February, is already reflected in downgraded global growth projections and higher inflation forecasts.

The central bank cautioned that a prolonged escalation of ...